FILE - In this May 21, 2012 file photo, television correspondent Sabrina Quagliozzi reports from inside the Nasdaq MarketSite in New York's Times Square. To say that Facebook's debut as a public company was bungled is something like saying Facebook is a website you might have heard of. Either way, it's a colossal understatement. The response from small-time investors has been equal parts frustration, confusion and anger. Fed up, some are dumping their shares and accepting the losses. Others, while miffed, are holding on and hoping to ride the stock's eventual success. (AP Photo/Richard Drew, File)

Facebook shares fell to a new low, extending losses from the worst-performing large initial public offering during the past decade to more than 24 percent.

The stock fell 9.6 percent to $28.84 in New York, below the prior low of $30.94 on May 22. Facebook began trading May 18 after underwriters sold shares at $38. Facebook options trading began Tuesday, with volume for puts exceeding calls by 1.2-to-1, data compiled by Bloomberg show. More than 200,000 puts giving the right to sell traded.

About $25 billion in market value has been erased from Facebook as bearish sentiment built in stock and options markets after the social-networking site went public while U.S. equities headed for the biggest monthly decline since September. (With the latest drop, Facebook's value is about $79 billion.) The company, its underwriters and Nasdaq were sued last week by investors who say they lost money in the IPO. June $30 puts were the most-active contracts, with volume at 23,723. They were followed by June $34 calls and June $32 calls.

'Believed the hype'

"People are disillusioned," Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor, said in a telephone interview. He doesn't own shares of Facebook. "A lot of investors believed the hype," he said. "In this type of volatile market environment, people are not going to take chances."

Facebook shares climbed as high as $45 May 18, when the shares ended the day with a price-earnings ratio of 83.1, making the Menlo Park company more expensive than 99 percent of S&P 500 stocks.

The IPO, which set a record for technology companies by raising more than $16 billion, produced the worst five-day return among the 10 largest U.S. deals of the past decade. The 13 percent loss through May 24 exceeded the 10 percent drop by MF Global Holdings in its first five sessions.

The stock plunge has also pushed the purchase price for photo-sharing site Instagram below the $1 billion that Facebook offered last month. Facebook is paying $300 million in cash plus about 23 million shares of common stock to acquire Instagram. The deal is now valued at about $963 million.

Facing criticism

Facebook and Morgan Stanley, its lead underwriter, faced criticism for boosting the number of shares sold in the IPO by 25 percent to 421.2 million in the days before the deal. They also increased the asking price to $34 to $38 from $28 to $35.

The first day of trading was disrupted by the "poor design" of Nasdaq's software for IPO auctions, Robert Greifeld, the chief executive officer of the exchange operator, said May 20. The malfunction also prevented Nasdaq from sending messages to brokerages confirming that clients' orders went through.

"Investors are incorporating the risks embedded in the stock," Brian Wieser, a senior analyst at Pivotal Research Group, said. He has a sell rating on the stock and a $30 share-price estimate. "A lot of people are trying to trade the stock on the basis of those expectations. Options will be a very robust marketplace with respect to Facebook."